On Free Trials

The solution is so simple, so easy, and so full-proof that I’m confident it would, if implemented, at least double our revenue practically overnight: Give people the option of a free monthly trial.

If users could download and use Dark Sky for free for a limited time, their hesitation at spending $3.99 would disappear. It’s either worth it or it isn’t, and they’d get to decide for themselves rather than take someone’s word for it.

While I do believe having free trials in the iOS and Mac app stores would be beneficial for developers, because it would likely increase revenue as Grossman states above, I also see it as being beneficial for users.

Both upgrade pricing and trials are popular with developers because they’re ‘the way things have always been done’. Dating back to the shareware days, you could try a product and then, if you enjoyed it, you could pay for it. If the developer upgraded to version 2.0, existing customers were either given the update for free or for a discounted rate for being loyal customers.

The App Store turned ‘the way things have always been done’ on its head. Instead of having third-party software sold either in boxes or at hundreds (thousands?) of different boutique storefronts, Apple manages the entire store and purchase process for both users and developers.

If you want to run third-party software from outside of the App Store, your options are to jailbreak your phone or buy an Android.

Every year, there is an uproar from developers who lament the loss of trials and upgrade pricing because they believe they will bring an increase in sales that for many (myself included) is sorely needed.

That people aren’t buying software because there’s no trial is flawed notion. People aren’t refusing to buy paid apps because they are cheap or don’t trust these unknown apps. They’re just different customers than traditional software shops are used to working with.

My parents never downloaded software on their home PC. If they needed a new piece of software at work, that was something that would magically appear thanks to the “IT guy” (likely you if it’s Thanksgiving or Christmas). Even though they never downloaded software, my parents were well versed at using technology thanks to the ubiquity of the web.

That would be the World Wide Web, where nearly everything is given away for “free”.

Developers are now trying to target this new breed of software consumers who are for the first time empowered to download apps onto their iPhone or Android. There are thousands of free apps to keep them occupied and happy. When they encounter a paid product, they are likely doing the same thing they do when they encounter the paywall on a web site: find a free alternative.

I don’t have a solution to the problem, but I know that trials won’t transition customers who have grown up in the age of free into people willing to part with money for software. A martini may be $10 whereas your app is a mere $2.99, but people are conditioned to always pay for their liquor as food and drink has always been a pay-for product.

On Upgrade Pricing

We still feel upgrade pricing is important for customers purchasing serious productivity software, since the initial value received from purchasing an app like OmniGraffle or OmniPlan is much different from the incremental value of upgrading that app from version 5.0 to version 6.0.

This comes after the OmniGroup released a product that allowed customers who purchased Omni products from the Mac App Store to purchase new versions of the software on Omni’s own store at a discounted/upgrade price point.

Apple scoffed at this because they don’t want developers to shift their shared customer base outside of Apple’s safe and secure App Store and back into the Wild West of third-party software sites.

Scary? Absolutely. Surprising? Not really.

Apple is the company that dictates that all digital products and services sold through iOS apps use Apple’s in-app purchasing system. You’re not even allowed to link to a web site such as the Kindle Book Store because that would bypass Apple’s 30% cut.

Every year, we have another dust up about developers and power users wishing for the return of upgrade pricing in the App Store age. And every year, it becomes even more obvious that upgrade pricing is another relic of the past.

Apple is more interested in developers either offering free updates indefinitely, or offering a completely new SKU at the same price for every user: old or new. Given that pricing in this new App Store age have hit rock bottom, on iOS that usually means somewhere under $4.99 and OS X somewhere under $29.99.

One price for all. Is that a raw deal for existing customers? If you’re comparing it to the way software used to be sold, yes, but not in a lot of other industries. I’m not getting a discount on FIFA from EA each year just because I bought it last year. I’m going to drop another $60 on the new version.

I just bought a new TiVo Roamio to replace my existing TiVo Premiere. It cost me the retail price of $299. There was no discount for upgrading to the new version, even though I owned the previous one.

The sooner developers accept this, the less painful it’s going to be. We’ve spent half a decade debating the merits of trials and upgrade pricing, and every year Apple remains silent. If you still believe it’s in Apple’s playbook to offer, I’ve got a bridge to sell you.

Transitioning power users and the subset of the population that is willing to pay for software in the old, traditional way is going to be painful for a while, but the pain will subside. Offering two stores with two different pricing models only extends that painful transition phase even longer.

It’s noble to want to offer a discount to your loyal customers, but if Apple’s not going to allow it in their store, segregating your users based on which store they purchased in turns out to be confusing and frustrating.

What the lack of upgrade pricing means is that software is being priced at a lower, base price. A $50 app for new users that is $30 for upgraded users is now being offered somewhere around $25 for everyone. Whether that makes good financial sense is up to your company’s bean counters, but that’s what Apple’s pushing toward and resistance is only causing developers to lose more hair.